Irish Property Market 2020 Part 2

PropQueries · 16-10-2020 2:45pm

schmittel wrote: »

I wouldn't agree everyone knew by mid 2007. But the smart money did and had already taken evasive action.

There were still plenty of people saying "Rubbish, look at the fundamentals, Ireland is different, you're just a gloom merchant, people still need a place to live, they're not making any more land you know, soft landing, sure you might be right eventually, but you said the same last month etc etc"

Not entirely different to 2020 really.

Well in the middle of 2007, Brendan O'Connor stated that "The level of property horror stories is at an all-time high". I would interpret that as meaning most people i.e. it was no longer such a secret to be taken advantage of by the 'smart money'

fliball123 · 16-10-2020 2:55pm

PropQueries wrote: »

Well in the middle of 2007, Brendan O'Connor stated that "The level of property horror stories is at an all-time high". I would interpret that as meaning most people i.e. it was no longer such a secret to be taken advantage of by the 'smart money'

and today we have stories about people not being able to buy due to the prudent lending rules the 2 periods now and 2008 are completely different no matter how you spin it

Timing belt · 16-10-2020 3:02pm

schmittel wrote: »

I wouldn't agree everyone knew by mid 2007. But the smart money did and had already taken evasive action.

There were still plenty of people saying "Rubbish, look at the fundamentals, Ireland is different, you're just a gloom merchant, people still need a place to live, they're not making any more land you know, soft landing, sure you might be right eventually, but you said the same last month etc etc"

Not entirely different to 2020 really.

Every man and there dog can see that the global economy is on its knees thanks to covid and the stress to the system is 100 times that of 2008. The big difference is that Governments/Central Banks have taken action early to prevent a repeat of 2008.

Whilst nearly everyone agrees that the action taken will be sufficient for a short sharp contraction not everyone is convinced that it will be sufficient for a longer term contraction.

People that keep talking about banks being bailed out again but need to see that central banks and governments are bailing out the economy before it get's a chance to hit the banks.

The Central banks and governments have gone all in as they know that if it blows the fall out will be worse than 2008 so have noting to loose. Only time will tell if the action taken is sufficient.

Obviously people will have different views on whether it will work or not and for that reason will have different views on where they see the housing market going. Comparing the current housing market to 2008 is misleading as it is a very different dynamic this time around.

PropQueries · 16-10-2020 3:07pm

Timing belt wrote: »

Every man and there dog can see that the global economy is on its knees thanks to covid and the stress to the system is 100 times that of 2008. The big difference is that Governments/Central Banks have taken action early to prevent a repeat of 2008.

Whilst nearly everyone agrees that the action taken will be sufficient for a short sharp contraction not everyone is convinced that it will be sufficient for a longer term contraction.

People that keep talking about banks being bailed out again but need to see that central banks and governments are bailing out the economy before it get's a chance to hit the banks.

The Central banks and governments have gone all in as they know that if it blows the fall out will be worse than 2008 so have noting to loose. Only time will tell if the action taken is sufficient.

Obviously people will have different views on whether it will work or not and for that reason will have different views on where they see the housing market going. Comparing the current housing market to 2008 is misleading as it is a very different dynamic this time around.

Good point. But back in the Celtic Tiger years it was foreign money (e.g. German deposits lent to Irish banks etc.) being pumped into the property market that resulted in a property bubble.

Today, it's still foreign cash being pumped in, but through a slightly different mechanism i.e. investment funds.

Not as different as many seem to believe?

HotDudeLife · 16-10-2020 3:12pm

TheSheriff wrote: »

I'm sure there are multiple other time points you could have used to demonstrate a stable market other than 08.

Again you are trying to drum up the idea in users minds that a crash is imminent.

But on another note, at least your posts are no longer feigning only a mild unbiased interest in the property market.

How can a crash not be imminent?

In every great recession the global economy did not shut down completely even for one day, the brakes have been put on the global economy for months now with nearly all sectors impacted and consumer confidence will be at an all time low in a couple of months (especially if there is a 2nd lockdown).

Tens of millions across the world will lose their jobs within the next 1-2 years. This is a perfect example of a black swan event, so how will everything somehow remain hunky dory?

HotDudeLife · 16-10-2020 3:25pm

schmittel wrote: »

I wouldn't agree everyone knew by mid 2007. But the smart money did and had already taken evasive action.

There were still plenty of people saying "Rubbish, look at the fundamentals, Ireland is different, you're just a gloom merchant, people still need a place to live, they're not making any more land you know, soft landing, sure you might be right eventually, but you said the same last month etc etc"

Not entirely different to 2020 really.

Exactly this, i made a remark that i predict a drop of around 10-15% in property by this time next year and a huge economic crash (which there already is) and was labelled the same and laughed at on here, one such smug mod posted a reply similar to "sure you might be right eventually" (despite that being my first timeline prediction).

People have very short memories and ignorance is well and truly bliss in 2020, i suspect those shooting down and defending claims are just desperate property owners or investors who made bad decisions and purchased at the wrong time.

HotDudeLife · 16-10-2020 3:27pm

javaboy wrote: »

Eh yeah. That’s why I said they make far more but not 5 times.

Grads in my own company make north of 50 from day 1 ignoring RSUs etc. never mind after a couple of promotions.

Like for like in the US the base salary is around 2.5-3 times that. Not 4 or 5.

If you’re an SDE II here and 250k is 4-5 times your income, it’s time to hop jobs for somewhere more competitive.

My numbers are anecdotal but the likes of Glassdoor would say similar. No need for exaggeration is all I’m saying.

This poster is correct, don't listen to the other "hiring manager", they are either telling porkies or you would never want to work for their firm.

HotDudeLife · 16-10-2020 3:31pm

fliball123 wrote: »

I would call it a spending budget when you put everything together (not just housing) how much extra we are paying out for Health, Public sector getting payrises, how much are we paying now on welfare, they are also throwing money at infrastructure and with the exception of fags and carbon tax , taxes did not rise. If you dont call that a spending budget then I dont know what is.

I call it a kitchen sink budget, if/when it's proven to have failed and did nothing to resuscitate this hungover global economy you will see sh!t hit the fan.

Timing belt · 16-10-2020 3:42pm

PropQueries wrote: »

Good point. But back in the Celtic Tiger years it was foreign money (e.g. German deposits lent to Irish banks etc.) being pumped into the property market that resulted in a property bubble.

Today, it's still foreign cash being pumped in, but through a slightly different mechanism i.e. investment funds.

Not as different as many seem to believe?

When it comes to your conspiracy theory on investment funds it is like trying to talk to Gemma O'Doherty about Covid.

Your are entitled to your opinion as Gemma O'Doherty is entitled to her opinion on Covid. It doesn't mean that everyone needs to agree with you.

fliball123 · 16-10-2020 3:46pm

HotDudeLife wrote: »

I call it a kitchen sink budget, if/when it's proven to have failed and did nothing to resuscitate this hungover global economy you will see sh!t hit the fan.

well we will have to wait and see but people saying a crash is imminent in the most have been saying it for 9 months and it has not come to pass and the budget will keep things ticking along for the next 12 months or so..Hopefully there will be a cure found in that time and students and tourists will come back

Potatoeman · 16-10-2020 3:58pm

fliball123 wrote: »

well we will have to wait and see but people saying a crash is imminent in the most have been saying it for 9 months and it has not come to pass and the budget will keep things ticking along for the next 12 months or so..Hopefully there will be a cure found in that time and students and tourists will come back

If they found a cure tomorrow then how long would it take to manufacture and distribute? How many businesses can actually survive this?

PropQueries · 16-10-2020 4:00pm

Timing belt wrote: »

When it comes to your conspiracy theory on investment funds it is like trying to talk to Gemma O'Doherty about Covid.

Your are entitled to your opinion as Gemma O'Doherty is entitled to her opinion on Covid. It doesn't mean that everyone needs to agree with you.

The investment funds did purchase c. €200 billion in property and business loans between 2012 and 2016.

Our difference of opinion in on what they bought. I think most of that spend was on property given that the banks weren't eager to sell their performing non-property related loan books. You obviously disagree but I don't see what else they could have bought for €200 billion between 2012 and 2016.

But back to how you believe today's property market is completely different to the situation that existed back in Celtic Tiger years.

Would you disagree that the property market during the Celtic Tiger years was primarily funded through foreign money?

Would you also disagree that the property market in Ireland over the past several years was also primarily funded through foreign money?

If you disagree, that's fine. If not, you would have to agree the situation today and back then are not entirely different. The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

Timing belt · 16-10-2020 4:14pm

PropQueries wrote: »

The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

The foreign banks pulling out of the Irish market only reduced competition on the mortgage market and did not have an impact on house prices. If Ulster bank sell there mortgage book (21bn) and exit the Irish market that does not mean that whoever buys the loan book buys 21bn of property. Sorry for being blunt but you do not know what you are talking about.

KennisWhale · 16-10-2020 4:14pm

Timing belt wrote: »

Every man and there dog can see that the global economy is on its knees thanks to covid and the stress to the system is 100 times that of 2008. The big difference is that Governments/Central Banks have taken action early to prevent a repeat of 2008.

Whilst nearly everyone agrees that the action taken will be sufficient for a short sharp contraction not everyone is convinced that it will be sufficient for a longer term contraction.

People that keep talking about banks being bailed out again but need to see that central banks and governments are bailing out the economy before it get's a chance to hit the banks.

The Central banks and governments have gone all in as they know that if it blows the fall out will be worse than 2008 so have noting to loose. Only time will tell if the action taken is sufficient.

Obviously people will have different views on whether it will work or not and for that reason will have different views on where they see the housing market going. Comparing the current housing market to 2008 is misleading as it is a very different dynamic this time around.

Very true but we are in a pretty severe housing crisis, which isn't going anywhere. Prices will gradually correct as supply comes on stream, not necessarily because of covid (IMO). It is clear that governments are doing everything to make sure the economy doesn't crash. As such, whilst unclear, it is not a certainty the economy is going to crash because of covid.

Over the last few months, look some of the announcements of residential developments being granted planning permission or in the process of being completed, in Dublin anyway. I have taken these from LinkedIn property business pages in the last 2 months, but it is clear the residential pipeline is extremely strong;

15/10/20 "Woodward Square project in Leopardstown, Dublin 18 progress. Will be 160 apartments when complete"
https://lnkd.in/eHa44KC

11/10/20 "Hines seeks to build up to 1,000 apartments at Liffey Valley"
https://www.businesspost.ie/residential/hines-seeks-to-build-up-to-1000-apartments-at-liffey-valley-20cfc192

9/10/20 "Carnlough Road, Dublin 7 progress update. The completed development will consist of 484 apartment units."
https://www.linkedin.com/feed/update/urn:li:activity:6719618069850927104/

8/10/20 "Masterplan unveiled for Cherrywood Village promising 1,300 homes".
https://www.dublinlive.ie/news/dublin-news/masterplan-launched-cherrywood-village-promising-19068727

2/10/20 "Planning Permission for the construction of 94 Apartments along with residential amenity space situated in the idyllic coastal town of Dalkey"
https://www.linkedin.com/posts/conor-rhatigan-915095131_winterbrookhomes-construction-activity-6716631367272189952-KDtl/

2/10/20 "324 apartments in Santry"
https://www.linkedin.com/posts/3d-design-bureau_santry-revit-3dsmax-activity-6716313014217273344-bJo7/

23/9/20 "One Springfield Park in Foxrock - a development of 20 apartments is still continuing despite the builder going bust."
https://www.dublininquirer.com/2020/09/23/in-foxrock-work-continues-on-apartments-after-the-developer-and-property-finance-company-close-down

9/20 "1000 homes grated planning permission in Ballyboden"
https://www.linkedin.com/feed/update/urn:li:activity:6711625873092595712/

9/20 "An application has been lodged to An Bord Pleneala for a 628 unit Strategic Housing Development in Dundrum"
https://www.linkedin.com/feed/update/urn:li:activity:6712368245925576704/

9/20 "In progress, apartments on Mount Anville Road"
https://www.linkedin.com/feed/update/urn:li:activity:6712080508777496576/

11/9/20 "Michael O'Flynn's O'Flynn Group has lodged plans to construct 1,137 residential units and a 15-storey hotel set to cost €625m at Walkinstown Avenue" https://www.independent.ie/business/commercial-property/group-lodges-625m-hotel-and-housing-plan-for-capital-39521826.html

09/20 "Richmond Homes is delighted to announce that its planning permission application for 148 apartments on Eglinton Road, Dublin 4" https://www.linkedin.com/posts/richmond-homes-ltd-ireland_richmond-homes-is-delighted-to-announce-that-activity-6709090514853003264--NuC/

9/20 "The Phase 3 refurb of Clancy Quay has been completed, which delivered 246 high quality residential units"
https://www.linkedin.com/feed/update/urn:li:activity:6711635078050578432/

9/20 "Planning permission granted for 52 homes in Malahide"
https://www.linkedin.com/feed/update/urn:li:activity:6710098070018826240/

9/20 "In progress, 142 dwellings in Dundrum"
https://marlet.ie/project/walled-garden/

9/20 "In progress, 216 apartments on Lime St, Dublin 2".
https://www.linkedin.com/feed/update/urn:li:activity:6707613227880103936/

9/20 "Planning permission granted for 413 apartments in the Liberties"
https://www.independent.ie/business/irish/bain-backed-vehicle-secures-planning-for-413-apartments-39521413.html

9/20 "A developer has been selected to build more than 600 homes on the Oscar Traynor Road site in north Dublin."
https://www.98fm.com/news/developer-selected-build-homes-oscar-traynor-road-site-1073331

1/9/20 "Hotel builds to be cancelled to make way for new homes
Developers to change plans as they seek to capitalise on demand for housing amid dramatic drop in hotel occupancy, according to report"
https://www.businesspost.ie/property-insight/hotel-builds-to-be-cancelled-to-make-way-for-new-homes-7dd05a3e?utm_campaign=article&utm_source=twitter&utm_medium=web

However, I think it is a bit different with commercial property, where the same optimism cannot be given. These articles do seem a bit like the Brendan O'Connor 2007 article, captains going down with their sinking ships;

https://www-irishtimes-com.cdn.ampproject.org/c/s/www.irishtimes.com/business/commercial-property/dublin-office-lets-up-125-in-last-quarter-says-cbre-1.4373567?mode=amp

https://www.irishtimes.com/business/commercial-property/commercial-real-estate-security-and-yield-remain-attractive-in-face-of-covid-19-1.4372576

Vieira82 · 16-10-2020 4:18pm

don't know if this was shared before but would like to know but it's related to this topic:

https://www.irishexaminer.com/business/economy/arid-40063946.html

Marius34 · 16-10-2020 4:22pm

HotDudeLife wrote: »

Exactly this, i made a remark that i predict a drop of around 10-15% in property by this time next year and a huge economic crash (which there already is) and was labelled the same and laughed at on here, one such smug mod posted a reply similar to "sure you might be right eventually" (despite that being my first timeline prediction).

People have very short memories and ignorance is well and truly bliss in 2020, i suspect those shooting down and defending claims are just desperate property owners or investors who made bad decisions and purchased at the wrong time.

I wouldn't call 10% in property price fall, a huge crash.

PropQueries · 16-10-2020 4:24pm

Timing belt wrote: »

The foreign banks pulling out of the Irish market only reduced competition on the mortgage market and did not have an impact on house prices. If Ulster bank sell there mortgage book (21bn) and exit the Irish market that does not mean that whoever buys the loan book buys 21bn of property. Sorry for being blunt but you do not know what you are talking about.

By foreign banks you know I meant the money foreign banks lent to the Irish banks to lend into the Irish market.

The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

Hubertj · 16-10-2020 4:27pm

Vieira82 wrote: »

don't know if this was shared before but would like to know but it's related to this topic:

https://www.irishexaminer.com/business/economy/arid-40063946.html

i did read it and read a similar article elsewhere.... I also heard Eddie Hobbs new ad on radio where he mentions the same issue.

Hubertj · 16-10-2020 4:28pm

Marius34 wrote: »

I wouldn't call 10% in property price fall, a huge crash.

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

hometruths · 16-10-2020 4:37pm

Hubertj wrote: »

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

Marius34 · 16-10-2020 4:38pm

Hubertj wrote: »

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

It definitely would mean a significant correction/fall, but this would not be enough to destroy a whole Property market. I believe most residential construction companies and banks would handle 10-15% fall. Which I wouldn't call a huge crash.

I was referring to comment:

HotDudeLife wrote: »

Patience my friend, play the long game. This house of cards won't be standing much longer, huge crash coming in 2021-2022.

fliball123 · 16-10-2020 4:39pm

schmittel wrote: »

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

Has the market dropped by 10% yet? Did I miss something?

hometruths · 16-10-2020 4:39pm

fliball123 wrote: »

well we will have to wait and see but people saying a crash is imminent in the most have been saying it for 9 months and it has not come to pass and the budget will keep things ticking along for the next 12 months or so..Hopefully there will be a cure found in that time and students and tourists will come back

Prices were dropping when the students and tourists were in town, before anybody had ever heard of COViD 19.

Seems like Covid is the only thing propping the prices up right now.

hometruths · 16-10-2020 4:40pm

fliball123 wrote: »

Has the market dropped by 10% yet? Did I miss something?

Just the point of my post.

EDIT: I take it back. I see Marius has now said 10% is significant.

PropQueries · 16-10-2020 4:42pm

Hubertj wrote: »

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

You're right. I think there's a big difference between the younger generation and the older generation on this issue. The younger generation have grown up with prices fluctuating very heavily and very frequently over the past ten years and have become accustomed to it e.g. shares going up one day by 10% and dropping a week later by 10% and so on.

This is not normal behaviour in any properly functioning market. It just signals that noone can value anything and that's a very dangerous situation.

Timing belt · 16-10-2020 4:43pm

PropQueries wrote: »

By foreign banks you know I meant the money foreign banks lent to the Irish banks to lend into the Irish market.

The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

The reason I gave ulster bank as an example is to show how crazy your theory on investment funds is as by your reckoning they buy property and not loans. You have avoided this as you know that you are unable to back it up.

The issue in 2008 was that there was cheap credit and plenty of it and this found its way into the mortgages.

This time around there is cheap credit and plenty of it (Backed by the ECB) but it has not found its way into the mortgage market. (See the data from the central bank in the graph)

Balluba · 16-10-2020 4:43pm

Marius34 wrote: »

I wouldn't call 10% in property price fall, a huge crash.

Hot Dude predicted a fall of between 10% - 15%
I would consider a 15% drop to be quite substantial. On a €600,000 house the price drop would be €90,000

Marius34 · 16-10-2020 4:44pm

schmittel wrote: »

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

I told at the beginning of crisis that I expect around -5% property prices lower, which is not that far from 0% or -10%, but it is very far from -30% crash, that many was forecasting back than.

PropQueries · 16-10-2020 4:54pm

Timing belt wrote: »

The reason I gave ulster bank as an example is to show how crazy your theory on investment funds is as by your reckoning they buy property and not loans. You have avoided this as you know that you are unable to back it up.

The issue in 2008 was that there was cheap credit and plenty of it and this found its way into the mortgages.

This time around there is cheap credit and plenty of it (Backed by the ECB) but it has not found its way into the mortgage market. (See the data from the central bank in the graph)

It's impossible to back up what comprised of the €200 billion in property and business loans the investment funds purchased between 2012 and 2016 due to the secrecy of those deals. But, it's reasonable to assume that it mostly comprised of property investment and property related loans as the banks weren't exactly eager to sell their performing non-property related loans.

Once the investment funds owned the loans, they owned the assets that those same loans were secured on unless of course the developers and other property investors did indeed manage to repay those loans. Maybe all those property developers in rural Ireland did repay all those loans. Entirely possible but not very probable.

In relation to the ECB cash finding its way into the mortgage market. It may not have found its way into the mortgage market, but I would guess you would agree that it has found its way into the property market via the back-door?

Bubbaclaus · 16-10-2020 5:02pm

Marius34 wrote: »

I told at the beginning of crisis that I expect around -5% property prices lower, which is not that far from 0% or -10%, but it is very far from -30% crash, that many was forecasting back than.

There was somebody in this thread predicting 70% crash last week. Could buy a 500k home for 150 then!

Irish Property Market 2020 Part 2

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